Rules of Consideration: Key Components of a Legally Binding Agreement

what are the rules of consideration?

1. consideration cannot come from an existing duty.2. consideration must be sufficient.3. consideration must be tangible or identifiable.4. consideration cannot be past.

Consideration is a fundamental requirement to create a legally binding agreement between two parties. It implies that an agreement must involve an exchange of something of value or benefit to both parties. Here are some of the essential rules of consideration:

1. Bargained-for-exchange: Consideration must be the product of a mutual bargain or exchange. The consideration can be anything of value, such as money, property, or services.

2. Must be Something of Value: Consideration must involve something of legal value or benefit to the parties involved in the agreement. It can be anything from a promise to perform a service to a transfer of property.

3. Must be Given Before or During the Contract: Consideration must be given before or during the contract’s formation. It cannot be promised for future performance, as promises alone are not considered valid considerations.

4. Adequacy of Consideration: The courts do not consider the adequacy of consideration, which means that as long as something of value is given in exchange, it is deemed sufficient.

5. Consideration must not be Illegal: Consideration must be legal and not against public policy. For instance, bribes and illegal activities cannot be considered valid considerations.

Overall, the rules of consideration ensure that both parties benefit from an agreement and that the exchange of value is fair and equitable.

More Answers: